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Fighting the Sunk Cost Fallacy

One of the biggest challenges with maintaining a growth mindset is overcoming a number of cognitive biases omnipresent in our lives.  As part of my “evangelism” role, I am always looking for ways to improve privacy and security operations to be more effective, efficient, and user-friendly. This can lead to roadblocks and disagreements firmly rooted in the sunk cost fallacy.

What is the sunk cost fallacy? I could go into the whole realm of behavioral economics that form the cognitive bias, but most people can identify it by the common phrase “this is how we’ve always done it”. And one of the reasons it is so hard to overcome is because of the emotional hammer it blows down on the people who may have built the prior system. No matter how one tries to communicate “this is great, and we can make it even better” the listener may feel a severe negative emotional response because of the effort they put into the project. Even if they hear “let’s build on this!”, they may feel “it – and I – wasn’t good enough.”


And too many articles on sunk cost fallacy reinforce the negative emotional response by tying sunk cost to bad situations: “useless endeavors”, “bad decisions”, “toxic relationships”, and “failing investments” are the frames of reference used to illustrate the sunk cost fallacy. But the sunk cost fallacy ties can keep us from growing, even if the original creation, investment, or project was the best and most appropriate solution at the time. The challenge, of course, is that time changes. People, governments, laws – they all change over time. Business systems and operation need to mature with those changes, and that means we have to step away from the negative emotional connotations associated with sunk costs and see them for what they are – investments and developments that were valuable to the company and served good purpose, but whose purpose must evolve.


How do you manage this within your teams? What tips do you have to encourage your team to find a growth mindset – and avoid the sunk cost fallacy – while still ensuring everyone feels their work was valued  and that they were valued for past contributions, even if those contributions may become obsolete?  


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